4 Important Signals That Investors Are Watching for the Next Price Rise of Bitcoin

Bitcoin ( CRYPTO: BTC) is thriving thanks to easy cash, just like how a favorite bonfire loves dry pine leaves. Add kindling and the flames rise higher; extinguish the kindling and the light will quickly fade. Currently, a set of four macro measures indicates that central banks, specifically the Federal Reserve, may be taking steps to facilitate a strong price increase of cryptocurrencies. Investors who monitor these metrics ahead of the crowd often catch the next price surge of Bitcoin while everyone else is still debating the headlines.

1. Money Supply Consider the vast money supply of the United States (M2) as one of the many fuel tanks of the economy. When this reservoir is full, there will be more cash for everything, from mortgages to speculative assets like Bitcoin. When it is shrinking, households and businesses will pull back, and risk assets will face difficulties. Moreover, as a general rule, when money is easier to come by, investors tend to be more willing to take on riskier bets, such as in cryptocurrency. After many months of contraction, M2 growth turned positive at the beginning of April. According to the latest data from the St. Louis Federal Reserve, this increase is currently about 1% higher than last year's level. It's not a big leap, but history shows that the shift itself is significant. Every major Bitcoin price increase after 2010 only started after M2 stopped contracting. So, keep an eye on its trajectory.
2. Bank Reserves Bank reserves are deposits that commercial banks hold at the Federal Reserve. A high reserve level means that banks can comfortably lend to each other and to many of their customers without worrying about running out of money, which helps keep credit cheap and abundant. Cheap credit is good news for assets that thrive on liquidity, such as Bitcoin. Reserves have remained above $3 trillion for most of 2025, much higher than the level that regulators calculate is comfortable. With that amount of cash sitting idle, banks have little reason to restrain lending activities, and additional credit tends to flow into higher-risk corners of the market. In other words, as long as this situation persists, Bitcoin will continue to benefit.
3. Fed's Balance Sheet The Fed has reduced its balance sheet. The Fed has sold U.S. Treasury bonds that they purchased during the pandemic stimulus, essentially pulling money out of the system. Fewer dollars in circulation typically tightens financial conditions and cools risk appetite. On March 19, the Fed stated that they would slow the pace of this reduction, cutting the monthly cap on Treasury bond reductions from $25 billion to $5 billion. The reduction in the pace of dollar absorption will create more liquidity, and if the government continues to borrow heavily, the balance sheet may grow back before 2026. Such a change is like turning off the money printing machine, and then immediately turning the money printing machine back on -- and Bitcoin loves it when the money printing machine is running.
4. Funding Cost in USD International capital flows are also an important indicator to monitor for Bitcoin, although they are slightly more complex than the other mechanisms we have discussed so far. Currently, large multinational companies can borrow dollars and convert them into euros at a discount of about 2%, cutting their overnight interest bill. When money is this cheap, some reserve cash often leaks into riskier assets, and a similar setup at the end of 2023 helped drive the 80% rally of Bitcoin. If the discount continues, this will be a driving force for this currency. How to Invest Based on This Information These four signals rarely flash green at the same time. Therefore, savvy investors should build their Bitcoin positions slowly while enthusiasm is still scarce, so they can participate as liquidity surges. Buying in small weekly amounts using the dollar-cost averaging method (DCAing), even amid sensational headlines about trade wars or dramatic elections, helps to neutralize any timing risks, so this is perhaps the best way to proceed here.